The University of California has accepted a $40 million settlement from Andersen Worldwide, SC, one of the defendants in a class action suit launched by investors who lost billions in the high-profile meltdown of Enron Corporation.
"We regard this settlement as only a first step in obtaining recovery," James Holst, the university's general counsel, said in a statement released following the settlement. "We will continue to pursue damages from the remaining defendants, most of whom had far deeper involvement in the Enron debacle than the overseas Andersen firms."
Through its pension fund, UC lost $145 million on its Enron investments when the company's accounting scandals become public, forcing it to file for bankruptcy. The university then took the rare step of becoming the lead plaintiff in a lawsuit charging 38 of Enron's directors and 28 partners and accountants with defrauding investors.
Larry Goldstein, senior fellow at the National Association of College and University Business Officers, says there's a reason why universities have until now been hesitant to play such a public role in class action suits.
"There are so many stakeholders that you never know who you might alienate," Goldstein told the Chronicle of Higher Education.
But given the deep losses that many university pension funds are facing, that hesitancy may be fading, Goldstein said.